Just a few months after the Acting Comptroller of the Office of the Comptroller of the Currency (OCC), Michael Hsu, said that stablecoin issuers should follow bank-like regulatory obligations, the OCC head has once again reassured the need for banking standards.
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In a new statement, Hsu wrote that today all stablecoin issuers are "like the pre-Civil War state banks" and crypto exchanges follow the "paper money men" model. He also noted that there is the so-called "intraday liquidity risk" on the stablecoin market that can be solved by requiring stablecoin issuers to conduct this activity in a "standalone bank chartered entity, separate from any other insured depository institution (IDI) subsidiary and other regulated affiliates."
"Additional safeguards could be considered, including enhancements to restrictions on interaffiliate transactions applicable to IDIs [insured depository institution]," Hsu added.
In January, Hsu also said that stablecoin issuers are subject to bank regulation. He stressed that bank-like regulation would give stablecoins holders confidence that "confidence that those coins were as reliable and 'money good' as bank deposits." Hsu, who became Acting Comptroller of the Currency in May, 2021, added that regulating stablecoin issuers could enable "more innovation" in the cryptocurrency market.
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